Legal Fees in Personal Injury Cases & The Solicitors Act Ontario

Recently, the Ontario Divisional Court released their decision in Gilbert’s LLP v. David Dixon Inc., 2017 ONSC 1345. The Honourable Justice Nordheimer, speaking for the Court had some pointed commentary with respect to the Solicitors Act and its application in 2017. The Solicitors Act goes back to 1909 England. The language contained therein is antiquated, and hard to understand; even for the most astute personal injury lawyer or Judge.

The Solicitor’s Act governs how lawyers bill and collect legal fees. This decision is important as the story of lawyers’ fees, particularly in the context of personal injury claims, has been all over the news lately.

Here’s what the Honourable Justice Nordheimer had to say about the Solicitors Act:

As I will explain below, the issue arises from the outdated and impractical processes contemplated by the Solicitors Act for the collection of legal accounts, which have been compounded by the failure of the Ministry of the Attorney General to properly resource the assessment process, that is provided for in the Solicitors Act.

The problem is further compounded by the confusing and problematic language used in the Solicitors Act, that renders any coherent understanding of the objectives of that statute virtually impossible. On that latter point, I note the following statement from the covering letter of the Ontario Law Reform Commission that enclosed its 1973 Report on the Solicitors Act. The Commission said:

The Solicitors Act is based on English legislation and practice which in some respects is no longer suitable to the needs of current Ontario practice. In many instances, the language used in the present statute is archaic and obscure, and has caused difficulty in interpretation.

[7] As prior decisions of this court demonstrate, the difficulties with the language used in the Solicitors Act do not provide lawyers (or clients for that matter) with a clear route to the determination of a client’s liability for payment of legal accounts. In that regard, one must appreciate that the provisions of the Solicitors Act, with which we are concerned here, date back to 1909. As already noted, those provisions are based on English legislation that was adopted in Ontario without any apparent consideration for the fact that the English and Ontario court systems differ in certain important aspects.

[8] The adoption of the English legislation also failed to take into account that English legislation drew a distinction between contentious work (i.e. court proceedings) and non-contentious work (e.g. real estate transactions, commercial matters). In England, of course, there is a marked distinction drawn between solicitors and barristers. That distinction is not made in Ontario. These two categories of legal work were combined in theSolicitors Act but without, it appears, a lot of thought as to the consequences of doing so as it related to the practice of law in this Province.

[9] It will come as no surprise to anyone that this provision has been largely, if not totally, ignored by the profession. Indeed, in its 1973 Report, the Law Reform Commission of Ontario noted, at p. 51:

At the present time, hundreds of agreements, oral, confirmed by letter, or signed by the client are entered into each week relating to fees in contentious matters, and no approval is sought from the taxing officer. The client is not aware that the solicitor has violated the provisions of The Solicitors Act, and often pays the agreed fee. In our view it is impractical to continue to require that such agreements be approved prior to payment.

Remarkably, more than forty years later, and notwithstanding that admonition in the Report, the provision remains in the Solicitors Act.

The current backlog in the assessment offices in this Province are well known, especially in the City of Toronto. It has been the subject of commentary in various decisions, including by the application judge in this case, when he said, at para. 3:

I fully recognize that the profession is currently experiencing a degree of frustration with the delays cropping up in the assessment process under the Solicitors Act. If the profession is frustrated, clients seeking to utilize the assessment system to adjust accounts from their solicitors are experiencing a similar degree of frustration. The delay required to obtain a hearing is, by all accounts, unacceptably long.

This wording is yet another example of the problematic language contained within the Solicitors Act. For one thing, the reference to rates greater or lesser than that at which the lawyer would otherwise be entitled to be remunerated, as the Law Reform Commission pointed out, has no application in Ontario. It is based on the English system that set various tariffs for fees that could be charged by lawyers for certain types of work. Ontario has never had any such tariffs.

[23] Another example is the reference to payment by percentage. An agreement for fees, based on a percentage, mirrors a contingency fee agreement and such agreements, until relatively recently, were prohibited in Ontario. Nevertheless, the section has always referred to agreements involving fees calculated by the use of a percentage. I note that there are separate provisions within the Solicitors Act, that deal with contingency agreements, that were added in 2002.

[24] Dambrot J. found that the other references in s. 16(1) (i.e. gross sum, commission, percentage) describe unusual or extraordinary fee arrangements. He concluded, as a result, that s. 16(1) only applies to written fee agreements that are “out of the ordinary”. I agree with that conclusion. In doing so, however, I recognize that the use of the words “or otherwise”, in s. 16(1), could be seen to be broad enough to expand the coverage of the section to all written fee agreements.

I should add that this conclusion is not intended, and should not be taken, as any approval of, or excuse for, the failure of the Ministry of the Attorney General to properly resource the assessment process. The problems that arise from that failure, both for the Bar and for the public, remain. It should also be apparent to the Ministry of the Attorney General that the time has long since passed when it ought to engage in a thorough review, and modernization, of the Solicitors Act, and all of its provisions.

The bulk of this Toronto Injury Lawyer Blog Post is taken directly from the Gilbert’s Decision. This is a scream for reform from the bench which is long overdue. Changes to the Solicitors Act are required in order to protect the public and the legal profession when it comes to legal fees.